Lucky Star Estates (I) Pvt. Ltd. vs Delhi Development Authorities
1986 Latest Caselaw 426 Del

JUDGMENT

N.N. Goswamy, J.

(1) This suit for recovery of Rs. 1,10,000/ has been filed by the plaintiff in the following circumstances.

(2) The defendant, the Delhi Development Authority, in its capacity as a statutory body and in discharge of its public function held an open auction on 25-7-1974 for the sale of cinema plot No. 70, Nehru Place, Kalka Ji, New Delhi for grant of perpetual lease-hold right. The relevant conditions of auction were that-the highest bidder had to pay 25% of the old amount towards the earnest money in cash or in the form of bank draft at the fall of the hammer. The balance amount of 75% had to be paid within 120 days from the date of issue of communication for acceptance of the bid. The highest bidder had to construct cinema house on the plot in question within a period of three years from the date of communication of acceptance of the bid, and the highest bid had to be accepted "by the defendant or its officer who had been authorised to do so. The plaintiff being the highest bidder at the auction deposited a sum of Rs. 3,75,000.00 being 25% of the bid amount. The acceptance of the bid was not communicated to the plaintiff" for a fairly long time and thus the plaintiff sent reminder on 19-3-1975 requiring the defendant to communicate to the plaintiff acceptance of the highest bid offered by the plaintiff in the said open auction. The plaintiff also mentioned in the said letter that all preliminaries relating to the building plans for the cinema plot had been completed by the plaintiff and the plaintiff was eagerly awaiting the receipt of the formal acceptance and he was too keep to make the balance payment of Rs. 11.5. lacs. Inpit

(3) The cheque was not encashed by the defendant and on 22-8-1975, the defendant sent back the cheque saying that the same would be accepted only after the issue of the demand letter from the defendant. The plaintiff again wrote letter dated 18-9-1975 to the effect that since the bid had not been rejected, the plaintiff was entitled to assume that the same has been accepted and as such the plaintiff was unable to understand the reason for the return of the cheque. Finally after a period of one year and three months from the public auction, the defendant vide its letter dated 13/14 the November, 1975 informed the plaintiff that the highest bid of the plaintiff for the purchase of the plot had not been accepted. The plaintiff was further informed that the action for refund of earnest money deposited was being taken shortly. In spite of that, the amount of Rs. 3.75 lacs deposited by the plaintiff was retained by the defendant till 18-2-1976 when the cheque for the said amount was sent to the plaintiff with a covering letter of the same date. No reason for explanation of any kind was given in the said letter or otherwise as to why such huge slim of Rs. 3.75 lacs was detained further by the defendant from 13/14th November, 1975 till 18-2-1976. The defendant also did not furnish any explanation for the delay of 22 months in rejecting the bid and refunding the earnest money paid by the plaintiff.

(4) It is alleged in the plaint that the plaintiff had made the deposit of Rs. 3.75 lacs by borrowing the same from M/s. 0m Apartments Pvt. Ltd. to whom, it paid interest at the rate of 17% per annum and paid back the said amount to 0m Apartments Pvt. Ltd. from various accounts thereby causing a loss to the plaintiff of 17% interest on the said amount. It is stated in the plaint that the retention of the money by the defendant from 31-1-1974 to 18-2-1976 illegally and without any lawful justification entitles the plaintiff to compensation equivalent to reasonable return on the said deposit made with the defendants. The defendant who has acted with gross negligence deliberate indifference, is liable to pay the amount claimed to the plaintiff as compensation by way of interest at the rate of 17% .per annum with monthly rests for the period 31-7-1974 to 18-2-1976. This amount comes to Rs. 1,38,104.00 . It is further stated that the plaintiff is also entitled to Rs. 50,000.00 spent by him towards the survey of land, preparation of plans, elevations, cross-sections and drawings. The plaintiff has also claimed Rs. 5000.00 towards arranging of the machinery at the cinema house and Rs. 5000.00 as general damages. The total claim of the plaintiff comes to Rs. 1,98,104.00 . However, the claim has been restricted to Rs. l,10,000.00 .

(5) It is further stated in the plaint that the plaintiff had served a notice under Section 53B of the Delhi Development Act, 1957.

(6) The suit has been contested by the Delhi Development Authority. In the written statement, the facts including the dates regarding the holding of the auction, deposit of the earnest amount, rejection of the bid and the refund of the earnest money have not been disputed. It is pleaded that the plaint has not been signed and verified by a duly authorised person and that the suit is barred by virtue of Section 53B of the Delhi Development Act. It is further pleaded that the parties are bound by the terms and conditions of the auction and the said terms and conditions do not provide for awarding any interest on the earnest amount.

(7) On the pleadings of the parties, the following issues were framed :-

1.Has the suit been validly instituted and the plaint duly signed and verified ? OPP.

2.Was the bid of the plaintiff duly accepted by the defendant ? OPP.

3.Is the suit barred by time ? (by virtue of Section 53B of the Delhi Development Authority Act, 1957) O.P.P.

4.Was any legal and valid notice served on the defendant ? OPP.

5.Has the conduct of the defendant been such as to cause loss to the plamtiff, and whether in respect of that conduct the plaintiff is entitled to claim loss, compensation or damages ?

6.Assuming that the plaintiff is to recover loss, compensation or damages, is any interest payable thereon, and is so, at what rate ?

7.Relief.

8. In respect of its case, the plaintiff has examined Baldev Krishan, its managing director as Public Witness 1. As regards the institution of the suit by a duly authorised person, he has deposed that he was duly authorised by resolution dated 8-11-1976 to institute the legal proceedings, to sign and verify the plaint in respect of the suit against the Delhi Development Authority. The resolution was duly proved and is exhibited as Public Witness /1. In view of this statement, Issue No. 1 was not pressed by the learned counsel for the defendant and as such is decider in favor of the plaintiff.

ISSUENo. 2 :-The case of the plaintiff itself is that the bid was not expressly accepted but it was pleaded that it was impliedly accepted inasmuch as it was not rejected for a long period. This certainly cannot amount to acceptance of the bid. In fact, the learned counsel, for the plaintiff, did not press this issue at all. Consequently it is decided in favor of the defendant and against the plaintiff.

ISSUESNos. 3 & 4 :-These issues, relating to the limitation and service of a valid notice, are the crucial issues in the suit and can be dealt with together. There is no dispute that the plaintiff was informed by letter dated 13th/14th November, 1975 that its bid had been rejected. There is also no dispute that the amount was refunded to the plaintiff Along with a forwarding letter dated 18-2-1976. Thus the cause of action would arise latest on 18-2-1976. The suit has been instituted on 12-11-1976. In case of ordinary limitation under the Limitation Act, the period of limitation would be three years but Section 53B of the Delhi Development Act restricts the period of limitation to six months in respect of certain cases. This Section 53B also deals with service of notice but it would be appropriate to reproduce the entire Section 53B of the Act, which is, as follows :--

53B(1)No suit shall be instituted against the Authority, or any member thereof, or any of its officers or other employees, or any person acting under the directions of the Authority or any member or any officer or other employee of the Authority in respect of any act done or purporting to have been done in pursuance of this Act or any rule or regulation made there under until the expiration of two months after notice in writing has been, in the case of the Authority, left at its office, and in any other case, delivered to, or left at the office or place of abode of, the person to be sued and unless such notice states explicitly the cause of action, the nature of relief sought, the amount of compensation claimed and the name and place of residence of the intending plaintiff unless the plaint contains a statement that such notice has been so left or delivered.

(2)No suit such as is described in Sub-section (1) shall, unless it is a suit for recovery of immoveable property or for a declaration of title thereto, be instituted after the expiry of six months from the date on which the cause of action arises.

(3)Nothing contained in Sub-section (1) shall be deemed to apply to a suit in which the only relief claimed is an injunction of which the object would be defeated by the giving of the notice or the postponement of the institution of the suit.

(9) As far as the service of notice under this provision is concerned,. the same was issued by the plaintiff on 9-3-1976, which is Ex. D. 8. The contention of the learned counsel, for the defendant, was that the notice did not say that the interest as being claimed. This contention is ill-founded as damages has been claimed and in the plaint also interest is being claimed by way of damages. Thus I hold that a valid noticedated9-3-1976was- served on the defendant.

(10) As regards the suit having been instituted, within -the 'period of limitation, it is an admitted fact that it was instituted beyond a period of six: months from the date of arising of cause of action i.e. from 18-2-1976. Even if two months period for notice has also to be excluded, even then it is beyond time. The contention of the learned: counsel, for the plaintiff, was that the period of six months as provided in Section 53B(2) of the Act is confined to suits where the Authority has acted Under the Act and in the present case, the action of the Authority is beyond the provisions of the Act or the rules. Reliance was placed on Vishal Builders (P) Lid. v. Delhi Development Authority, 2nd (1) 1977 Delhi 724, for the proposition that auctions held by the Delhi Development Authority are not under the authority of law and are beyond the powers conferred on the Authority under the Act.. In that case, it was held that a sale of Nazul land can be made only if rules. are framed and under a direction pf the Central Government and there was nothing to show that any rules had been framed or any sanction of the Central Government been framed or any sanction of the Central Government had been obtained. The case is, completely inapplicable to the facts of the present case. In the.present case, it has not been pleaded that the land was a Nazul' land or that the action was invalid. In fact, it has specifically been pleaded that the auction was held by the Authority in due discharge of its functions under the Act.. In case the auction was in due discharge of. the functions under the Act then obviously it is covered by Section 53B of the Act. Section 21 of the Act authorises the Authority to dispose of the land, in any manner, it likes. Consequently the Authority was competent to dispose of the- land by public auction, and the action of the Authority .was. not i beyond the powers given to it by the Act. Consequently it has to be held that the suit had, to be instituted within a period of six months from the date of the cause of action. Same having not been instituted is beyond the period of limitation and has to- be dismissed on this short ground.

ISSUESNos. 5 & 6 :-In view of my findings on issue No. 3, it is not necessary to decide these two issues but as the evidence has been recorded, it would be proper to record my findings on these two issues also. The earnest money for the auction was deposited on the fall of the hammer on 25-7-1974. It is true that the terms A conditions of the auction do not provide for the payment of any interest on the earnest money but that does not mean that the earnest money can be retained for an indefinite period. Section 46 of the Indian Contract Act provides :-

"SECTION 46. Where by the contract, the promiser is to perform his. promise without application by the promisee, and no time for performance is specified, the engagement must be performed within a reasonable time.

EXPLANATION.-THEquestion "what is reasonable time" is, in each particular case, a question of fact."

(11) The principle of this section is when a party in a contract is called upon to perform his part of the contract, It must be done within a reasonable time even if time has not been made as the essence of the contract. According to the explanation, the reasonable time depends on the facts of each case. In the present case, Public Witness 1, has deposed with reference to particular 234 auctions held by the Delhi Development Authority that the bids were normally accepted or rejected within a period of one to three months. Independently of this evidence, it has to be presumed and held that the auction bid must either be accepted or rejected within a period of three months unless some special reasons can be attributed by the Authority. In the present case, no reason whatsoever has been stated either in the written statement or at the bar by the learned counsel for the defendant. No witness has also been produced and there is no document on record to indicate that there was Any special reason for the Authority to withhold the acceptance for such a long period. The defendant being a public authority is expected to act fairly and in a just manner which it has obviously not done. In the circumstances, the plaintiff is entitled to claim damages against the defendant. The damages have been quantified by way of interest at the rate of 17% per annum. It has also come in evidence of Public Witness 1 that the defendant itself charges interest on delayed payments ranging from 18% to 36% to which there is no rebuttal. In the circumstances, it cannot be held that a claim of 17% per annum is excessive. In any case, the bank rate is also almost the same. The plaintiff has been fair enough to exclude a reasonable period and has confined his claim for the period from 25-7-1974 to 18-2-1976 and has excluded from that period a period of three months which, according to the plaintiff, should be considered a reasonable period. The other claims, mentioned above, of the plaintiff, has also been given, up. This the claim is regarding the interest at the rate of 17% per annum on Rs. 3,75,000.00 for a period commencing from 25-7-1974 to 19-2-1976 excluding three months from this period. The claim is wholly justified and I hold that the plaintiff is entitled to damages of Rs. I, 10,000.00 with pendents lite and future interest as claimed.

(12) In the result, in view of my findings on issue No. 3, I hold that the suit is barred by limitation and as such is dismissed. However, considering the facts of the case, I leave the parties to bear their own costs.